Hedge fund guru Ken Fisher of the $62 billion Fisher Asset Management Fund has made some intriguing moves in Q2 in Apple Inc (NASDAQ:AAPL), NVIDIA Corporation (NASDAQ:NVDA) and Amazon.com, Inc (NASDAQ:AMZN), according to the latest 13F forms just released by the SEC. Fisher is ranked #62 out of 202 hedge fund managers tracked by TipRanks, due to the portfolio gain of 49% since June 2013 and Sharpe ratio of 2.03. Indeed, we can see that the fund made an average gain of 12.2% on an annualized three-year basis, although this figure rises to 19.4% for the last 12 months alone.
As for Fisher himself, as well as managing a $62 billion fund and his own personal wealth of close to $4 billion, he is also a long-running author of a Forbes column and multiple books which attempt to break down the secrets of investing. Well-known titles include Super Stocks; The Little Book of Market Myths and his most recent work on contrarian investing called Beat the Crowd: How You Can Out-Invest the Herd by Thinking Differently. He also has an unexpected passion for 19th century logging- a subject on which he has become something of an expert. Fisher is funding research into the Redwood Tree and has himself documented over 30 abandoned logging cabins in the Californian mountains.
Fisher is a fan of the current bull run and recently told investors to keep buying because stocks are not as overvalued as some market commentators are warning. He says it is actually the valuation techniques that are the problem, and places particular blame on CAPE, a common valuation method that looks at a stock’s cyclically adjusted price to earnings ratio.
Now let’s see how this strategy played out in Q2 in three of the fund’s most interesting holdings:
Fisher ramped up the fund’s Apple holding by 2% in the last quarter to over 11.5 million shares worth $1.67 billion. The Apple holding is the fund’s third biggest stock at 2.67% of the portfolio. Since the last filing date of March 31, the holding is up by 0.66%.
Apple is currently making headlines with the news that thousands of people have turned up to the opening of its first retail store in Taiwan- part of its plan to expand its Asian operations. The new store, which has an incredible 130 employees, is in the famous Taipei 101 skyscraper. To create a kind of Apple community feel, the store will have ‘Today at Apple’ programs covering topics like music and photography. Apple has over 15% of Taiwan’s smartphone market- and no doubt that figure will increase with the launch of the iPhone 8. The company has recently launched a store in Singapore, and also plans to launch a new store in Korea soon.
The stock has a strong buy analyst consensus rating on TipRanks- in the last three months 24 buy ratings and 6 hold ratings have been published on the stock. A rare cautious voice came from five-star KeyBanc analyst Andy Hargreaves. He reiterated his hold rating six days ago with a very bearish $145 price target- almost $20 below the average analyst price target of $164. According to Hargreaves, the App Store makes up half of Apple’s services revenue which is bad news if there is a slow-down in iPhone user growth and App Store payments per user.
In contrast to his Apple increase, Fisher displayed a negative sentiment towards chip company Nvidia. Fisher slashed the fund’s Nvidia holding by 11% to just 2,000 shares worth $219,000- which makes the stock almost nonexistent in comparison to the size of the fund’s portfolio.
Nvidia has just been named the world’s smartest company in 2017 by Forbes because of the strength of its innovation- particularly in the field of artificial intelligence- and ability to execute these innovations successfully through its AI businesses. At the same time, Nvidia is constantly advancing in its bread-and-butter: GPU graphic chips.
It has just announced a new Game Ready driver for LawBreakers and SpiderMan games, and now RBC Capital has suggested that Nvidia could even manufacture graphic mining chips specifically designed for cryptocurrencies like Bitcoin and Ethereum. According to RBC Capital’s Mitch Steves, Nvidia would have an advantage here because of its dominant position in multiple other markets. This is good news for Nvidia give that a cryptocurrency surge saw Bitcoin reach $3,000 in early June, although it has since pulled back slightly to trade at the still-impressive price of $2,561.
The stock has a cautiously optimistic moderate buy analyst consensus rating. Over the last three months, the stock has received 14 buy, 9 hold and 2 sell ratings. However, with the recent spike in prices, the average analyst price target of $139.20 now translates into a downside from the current share price of 3.6%.
Fisher increased the fund’s Amazon stock by 2% in the last quarter. This makes the stock the second biggest in the portfolio, just after the LQD ETF fund. The fund’s holding of the e-commerce giant now stands at over 2 million shares worth $1.79 billion (about 2.87% of the total portfolio).
Five-star RBC Capital analyst Mark Mahaney recently reiterated his buy rating on Amazon with a $1,100 price target. He says that Amazon is increasing its lead from rivals due to its huge product selection and the attractive Prime subscription service delivery deals. RBC Capital’s US Online Shopper Survey revealed that an incredible 93% of consumers chose Amazon as their most used online shopping site, up from 89% last year. He also discovered that a very high proportion of users- 55% to be exact- are using Prime with 70% of subscribers saying their use of Amazon has increased since they became a subscriber. And with Amazon Prime Day coming up this month (30 hours with 100,000 deals) Amazon is likely to keep these figures moving higher.
With such positive data, it’s not surprising that Fisher is not alone in his Amazon optimism- we can see that Amazon has a strong buy analyst consensus from the Street rating with 27 buy and 3 hold ratings in the last three months. The Street are also predicting average upside from the stock of 16% from the current share price of $970 to the average analyst price target of $1,128.